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VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
What are the approaches to virtual reality? »
Virtual Reality:What does VR Look Like Today, and What Will Lead to Its Adoption?
L.E.K. Consulting / June 2015 LEK.COM
As new technologies are developed and price points drop, virtual reality (VR) is poised to take off for some applications.
In this new Executive Insights’ “Spotlight on Media & Entertainment” series, L.E.K. seeks to answer the following questions:
• What are the three approaches to VR, and which players are using each approach?
• Is VR possible without the expensive glasses?
• What will be the main drivers of VR adoption?
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
What sets Super VR apart? »
There Are Actually Three Virtual Realities:Many Think Only Traditional Super VR, But There Are Three Types
L.E.K. Consulting / June 2015 LEK.COM
Super VR(dedicated display built into headset)
1.
Key brands Key brands Key brands
Medium VR(split-screen smartphone display used by headset)
Casual Mobile VR(smartphone-only VR)
Project Morpheus Project Morpheus Cardboard
2. 3.There are three approaches to providing VR:
1. Super VR2. Medium VR3. Casual Mobile VR
A format war is breaking out among these three approaches, as well as among the individual companies using each approach.
Let’s first discuss the traditional dedicated display approach to virtual reality, Super VR.
Source: L.E.K. analysis
Project Morpheus Project Morpheus
L.E.K. Consulting / June 2015 LEK.COM
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Without a doubt, Super VR headsets will offer the most realistic VR experience with separate displays for each eye.
Advanced technology in the headsets that will contribute to the realism include:
• 360 degree head tracking so viewers can look around as in the real world
• Wide field of view (Oculus provides 110 degrees)
• 3D positional audio (Sony Project Morpheus)
• Augmented reality (Microsoft HoloLens overlays holographic images over real world scenery)
What content is available for Super VR? »
Beam Me to The Holodeck With Super VR:Advanced Technologies for the VR-Purist
Price
Casual Mobile VR(smartphone-only VR)
TBD
Oculus Rift
Sony Project Morpheus
Microsoft HoloLens
Expected Release
Early 2016
First half of 2016
2016
Software Source
Plugs into computers’
DVI & USB ports
Connects to Playstation 4’s HDMI &
USB ports
Full Windows 10 system built into headset
<$500 (expected)
Source: L.E.K. analysis
L.E.K. Consulting / June 2015 LEK.COM
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Could VR work at a lower cost using mobile phone displays? »
Fan Boy Excitement: Super VR Content is Hardcore Immersive Entertainment To Discerning Fan Boys
Photo:Frontier DevelopmentsSource: Elite Dangerous
A few developers are already churning out content for Super VR.
Only a few games are currently available, given the cost to create content and the low installed base of expensive Super VR development-stage glasses.
Fan favorites include VR updates to older hardcore gaming franchises like Elite, Half-life and Minecraft.
A few developers are producing content for Super VR. For example, in Elite Dangerous, viewers experience immersive space combat, diving and twisting through a real-time 3D environment.
L.E.K. Consulting / June 2015 LEK.COM
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
In Medium VR headsets, the smartphone contains the real VR power for lower-cost glasses (even cardboard “glasses” with Google Cardboard).
Key elements enabling the Medium VR experience include:
• An app to split the smartphone screen
• Tracking of the head orientation via built-in phone sensors (gyroscope, magnetic compass, gravity sensor)
• Tracking of the head location via GPS and accelerometers
What are the price points and who is providing Medium VR? »
Easy Does It: Medium VR Headsets Prove the Power of Simplicity and Lower Cost
Source: PC Mag
By splitting the screen, the retina of each eye receives a 2D projection, which the brain reconstructs into a 3D experience.
In the Google Cardboard approach, headset magnets work with the phone’s magnetic gyroscope sensor; sleeker versions use a button to replace the literal Google magnet.
L.E.K. Consulting / June 2015 LEK.COM
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Medium VR lets consumers use their existing smartphones to power VR headsets.
Key benefits of Medium VR include:
• Lower price than Super VR headsets
• More immersive VR experience than Casual Mobile VR (see next)
• Smartphones (and therefore VR software) are easily upgraded
What content is available for Medium VR? »
Holodeck on the Cheap: Quick-to-Market Medium VR Headsets use Smartphones For Cheaper Modern VR
Price
$5-60, depending
on case brand
$99.99
$199.99
Google Cardboard
Carl Zeiss VR One
Samsung Gear VR
Smartphone Compatibility
Any phone with iOS or
Jelly Bean 4.1 or later
Any iOS or Android with
4.7-5.2 inch screen
Samsung Note 4 or Galaxy S6
Software Development Kit
Google offers Android
and Unity 3D SDKs
Unity 3D SDK
Oculus Mobile SDK
Source: L.E.K. analysis
L.E.K. Consulting / June 2015 LEK.COM
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Could VR work without the glasses? »
Hold on Tight: Medium VR Content Offers Viewers Exciting New Experiences
Photo: VR Roller CoasterSource: Trusted Reviews
With relatively inexpensive headsets already on the market and open source software development kits (SDKs), developers are already churning out content for Medium VR.
Fan favorites include rollercoaster rides, zombie shoot-outs and a Volvo test drive.
Developers are producing content for Medium VR. For example, In VR Roller Coaster, viewers are in the front seat as the ride twists and turns.
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
How are consumers using Casual Mobile VR? »
Apart from VR headsets, there is another intriguing approach to virtual reality – VR enabled simply by using one’s own smartphone.
The Casual Mobile VR approach is the only way for the masses to view VR content without expensive glasses. It is also ideal for those who want the VR experience without the dorky headpiece.
Casual Mobile VR is an optimal vehicle for music videos, movie trailers, film shorts and other forms of entertainment that people want to keep in their pockets.
The New Reality is Casual Mobile VR:A Cheap Alternative Approach to VR That Billions Can View Today
Photo: Adtile Technologies
Enter a VR world by simply looking at your phone and interact with that VR world by moving the phone around.
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Which consumer applications for VR will lead to mass adoption? »
Placing Fans Closer to their Favorite Stars: Casual Mobile VR is Real Today for Interactive Music Videos
Source: Wall Street Journal, RadicalMedia, American Express
Viewers can move their phone or swipe the screen to see around the rooms.
Viewers can click on doors to visit the six different rooms while the music and video play.
An intriguing use of lightweight VR is the American Express’ Onstage Taylor Swift Blank Space Experience app, which lets fans interact with Swift’s “Blank Space” music video.
Rather than simply watch as Swift flits through palatial rooms, Casual Mobile VR lets fans navigate throughout the music video on their own accord.
This application requires downloading a big app, but new approaches are on the way (smaller apps as well as “stream to the phone” similar to YouTube).
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Why is gaming such a strong driver? »
While VR has been a familiar topic for decades now, what applications will finally drive consumer adoption?
These applications (see right) will drive VR to the tipping point and lead to mass adoption.
VR for the Masses: Which Consumer Applications for Virtual Reality Will Pave the Way?
Four Key Drivers of Virtual Reality Adoption
Gaming
Sports3-D
Animation
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
How could VR change the sports viewing experience? »
As Super VR headset competitors prepare to release their headpieces, they are pushing for gaming content creation, knowing that compelling content will drive hardware sales.
As more developers work to develop content, more are likely to hit on games that excite consumers enough to promote headset sales. As a result, headset developers are pushing SDKs to tens of thousands of developers.
If You Build It, They Will Come:Gaming as a Strategy to Incite Consumer Demand for VR Headsets
“… People won’t want to buy a VR headset if they can’t use it for a compelling game. And these games need
to be ready to go when the headsets hit the market …”
CNN, June 2014
Source: CNN
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
How could film studios use VR to promote upcoming releases? »
There are three reasons why sports offer prime content for VR adoption:
1. Filming live game content that is already being produced is cheaper than developing new content
2. Sports fans want immersive, high-quality content, as shown by early adoption of HD
3. Fans will pay large sums for this viewing experience, likely through a Pay-Per-View model
Grand Slam:Sports as a Unique Opportunity to Leverage VR
Photo: NextVRSource: Toronto Star
“… Every sports league, team, corporate America, sponsors and broadcaster… They all want to have a VR strategy,
because they know this is coming and it is totally disruptive …”
Brad Allen, Chairman of NextVR, April 2015
Imagine “sitting” next to Jack Nicholson courtside at a Lakers game in an immersive 3D viewing world for a $60 pay-per-view ticket.
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Why would 3-D animation be a driver in VR adoption? »
Major movie studios spend a lot to market films (close to half a billion for each studio each year), and many are already gearing up to produce VR trailers to promote their films.
Some say every big tent-pole movie release will have a VR trailer.
Lionsgate has already shown the appetite for VR advertising promotions by partnering with Samsung and investing in “Shatter Reality,” a virtual reality experience aligned with the film “Insurgent.”
Entering the Twilight Zone:Viewers Step Into Films with VR Movie Trailers
Photo: LionsgateSource: Lionsgate press release
“… Virtual reality elevates the world of Divergent to a whole new level by creating a uniquely exciting and immersive experience for our fans …”
Tim Palen, Lionsgate Chief Marketing Officer, February 2015
In “Shatter Reality,” viewers are immersed in the role of “Divergent” members of society and must undergo a series of VR mental simulations.
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
What have we learned? »
With conventional 3D cartoon animation repurposed for VR, viewers can move within a film.
Rather than develop new content, as in the case of gaming or live action, pre-existing 2D or 3D renderings can be adapted for VR. In other words, a movie studio producing a 3D animated movie can take the 3D models developed for a feature film and then repurpose this existing content for VR.
Not Your Average Sunday Morning Cartoon:Virtual Reality Enables Immersive Animated Viewing
Photo: OTOY Inc. and DC EntertainmentSource: Cartoon Brew
“… As the animation art form evolves in the 21st century, it has the potential to transcend its history as a passive viewing experience and become an immersive and interactive experience in which the viewer
experiences the cartoon world from within …”
Cartoon Brew, November 2014
Bruce Timm, creator of “Batman: The Animated Series,” is recreating the “Bat-cave” from the show’s original 1992 designs and fans will be able to view it through VR devices.
VIRTUAL REALITY
Executive Insights | SPOTLIGHT ON MEDIA & ENTERTAINMENT
L.E.K. Consulting / June 2015 LEK.COM
Our Executive Insights’ “Spotlight on Media & Entertainment” series covering “Virtual Reality” has clarified the complex approaches to the VR space and identified key drivers of VR adoption.
Current momentum in the development of viewing devices and VR content indicate that VR is here to stay and grow.
Our Outlook:Virtual Reality is Becoming a Reality
What have we learned about Virtual Reality?
1. Three approaches: Super VR, Medium VR and Casual Mobile VR
a) Super VR headsets are yet to be released to the public but promise exceptional immersive experiences
b) Medium VR headsets are relatively simple but their simplicity and low cost has driven a big catalog of good VR content
c) Casual Mobile VR is an accessible approach to virtual reality that billions can view today (requiring nothing more than the already ubiquitous smartphone); and this will drive the market this year
2. There will be a format war among the three approaches and among the ~20 companies trying to own the format – only a few can win the upcoming war
3. Gaming, sports, content promotion and 3D animation applications will drive both the mass adoption of virtual reality and which companies will win
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© 2015 L.E.K. Consulting LLC